welcome back. it's time for "call to action" on stocks you need to watch during afternoon trading and cnbc's matt nesto is here with a look. hello, matt. >> i'll tell you where the action is right now. i have three groups singled out here and on the move and driving a little change market. they can't figure out which direction to go. check out the airlines and the oil services all up nicely, if you will, as i said in a quiet market. the airline index is actually at a 23-month high. the gold index, interestly up

almost three times as much as the price of gold is on a percentage basis and the oil sers are up 5% in the past two days. financials have been pounded over the past month and they're back to the fore. if you look at those top five in the bow, if you will, in terms of the outperformance of the financials and you'll see hartford and jenworth out there. we have comments from pimco saying that the writedowns for mortgage and the set asides, for mortgage-related bonds will be about 40% less than some had feared and we're also seeing capital one rising on an upgrade to buy from hold. the flip side are some big financial losers. so it's want appe peer financia ral rally. it slowed from 17% to 24% in november. >> thanks so much. that will do it for us here on "the call." thanks for watching i'm melissa

francis. >> i'm mandy drury. >> i'm larry kudlow and the kudlow hot line will be open for your calls on everything and now "power lunch" is up next. good afternoon, everyone. at least good afternoon to all of you on the east coast. i'm tyler math son. stocks struggling after mixed data. financials amongst the best performers. >> i'm sue herera, breaking news all over pt power lunch." and google set to unveil its smart phone, but will it make consumers hang up on the iphone? >> apple rolls off the tongue and the most tech investors and shares of one veteran technology war horse at a ten-year high. >> we'll tell you the name and find out if you can get in on the action. >> what does president obama and

ashton kutcher have in common?ç besides both being pretty good looking. here's what else is on the menu. >> i'm jim goldman outside google headquarters in silicon valley, about an hour away from where we expect the company to finally, finally unveil its personal-branded entry into the smartphone market and what it means for you, consumers and shareholders coming up. i'm darren rovell. some of you have seen "avatar?" but are you ready for sports in hd? it could be coming to your home. >> a couple of key economic reports to chew on as an investor. new orders in u.s. factories rose 1% in november and that is more than expected and the third straight monthly increase. however, pending sales of previously occupied homes plunging more than expected because the end of a rush to beat the initial expiration of that home buyer tax credit. >> all right. on the market today, giving back a little gain, but of course, we

had a big move yesterday. let's talk about boeing, kraft food, caterpillar is among the winners. bob, are they just a little tired with a hangover perhaps from the big move yesterday? >> i think that the pending home sales contracts for december, i think that was a little bit on the disappointing side and we have very choppy numbers on that. right now 8 to 7 declining to advancing stocks and they're not too bad. let's talk about what's been moving here on a better news on the economic front and elsewhere outside of home sales from the airlines. load factors are continuing to improve and revenue numbers are continuing to improve with continental and the united airlines for the month of december. trends are looking better although they're still negative compared to next year. let's move on. we'll see upgrade and downgrades here. we've had positive comments on the fertilizer stocks from

credit suisse this morning. contracts for potash have improved and that's putting a floor fertilizer names and you can siefert riser names moving to the upside. we had upgrades and positive comments from tenet health care and radioshack both had positive comments. tenet says it may be the only hospital firm -- goldman says tenet might be the only hospital firm that will see higher margins in 2010. trader talk.cnbc.com. brian, how are we looking at the nasdaq? >> we're basically flat, down two points. apple, of course, more buzz on that tablet computer, sort of kindle meets iphone meets mack. color, 10.5-inch screen. goldman is all over nexus one. although çheadwinds, who will subsidize it? will they match up with carriers or subsidize on it on their own. >> no head win are winds, overweight for palm, rim and qualcomm. the research and motion is 90.

you see serious upside there and 57 for qualcomm and dell initiated by nicholas, up by 10.7% and threat go to sharon at nymex. we'll go through how the oil markets are trading and we have oil prices flat as we wait for the weekly inventory report coming from the energy department and from the industry group and the api data coming out this afternoon. gasoline futures are leading wait higher. you do have the sunoco facility in philadelphia that's been off line for a couple of days and that may be leading to some of the support there. the heating oil futures are being closely watched as we see cold temperatures and see what impact they'll have on distillate fuel supply which is is expected to be down in the next week. and natural gas is lower today. we're expecting to see the cold weather pattern that we've had in store and by january 14th and the look ahead is a little bit warmer. rick santelli, to you in chicago. >> since the 31st that thursday

session. look at a one-week chart and i'm not sure if you can pick up the intraday spikes and we went from 390 yield to very close to 3.75 on the ten-year and a big difference in the first few days of 2010. it's the same for the components that affects the dollar index. the yen. look at the dollar yen and we went from 93 and change in a short period of time. that is against the dollar. the lower the chart goes the lower value against the yen and supply, where do i begin? maybe treasury supplies next week although we had the one-month bill today, but you have breaking news on auto sales. let's go to phil lebeau. news from ford. december auto sales and this is much better than the street was expecting, an increase. the street was expecting an increase of 8.3%. guys, that's 15% better than expected. ford up across up across brand

categories for the year. do not be surprised if these guys touch 17% market share. they started the year 15.9% market share. we'll get the breakdown as well as gm's numbers coming out a little bit later on. >> phil, also ford came out with a statement that 2009 marked the first full year of market share gains since 1995. >> yep. that's an amazing statistic. obviously they're doing something right. >> oh, yeah. >> is it the product mix?ç is it the price point? is it the ability to finance? what is it? >> the biggest one is product mix because when you look at all of the automakers. when they all went into the terrible falloff in sales, ford continued with the product cadence that was already put in place and when allen mulally came in he said we'll have to restructure the company and the one area that he did not cut back, product plans. you have to have new products in the auto industry to continue to gain market share and that's the reason ford has gained.

you hear people talk about they didn't take government money and they're taking bunk. >> i think it did help initially. did cash for clunk verse no effect on december sales, right? ? no. so this is a pure, real number. that's pretty surprising. >> keep in mind, end of the year and not just ford, but all of the automakers, they really goosed the dealer incentives and they're trying to clear out as much inventory as possible. so december is a little bit of an anomaly, but that doesn't explain the 15% gain. >> what kind of pace are we looking for december auto sales ask since we're in december, we're looking at auto sales in the united states. >> the estimate for december and for auto data and first call was sales coming in at about 11 billion. you look at ford and it will be above 11 billion and for the year about 10.4 million and we might be above that, but keep in mind at 10.5 million it's the weakest sales since 1982. >> way down from the 16 million we were doing from the peak of

the credit bubble. thank you, phil. >> you bet. let's talk about the market here. joining us is bruce mccain, chief investment strategist at key private bank. let me start with you. are you worried at all about the january effect not playing out here? a lot of market watchers say the first five days in january is crucial and that's when pension funs start putting new money to work because we have a new tax year and when we see a strong first five days and historically, it has shown a good strong year as well. today's pullback. does it worry you? bruce? >> not at this point. i think that people are still digesting where we are economic low. we think the economy will continue to improve and we think that people are a little less cautious as we work through last year and have booked those gains and there are still problems throughout and if any major hiccup occurs in the economy that clearly will have an effect on the markets as well. >> jeff, what about you in the

other side of the coin, you could argue we had a great rally yesterday and we're holding on to most of it today. >> think the market is just trotting in place today. i think the otherç thing to pa attention to is where the money's going. you have commodities now that are an asset class. you have a lot of money going into commodities. all of the commodities are basically up across the board. the pension funds aren't just going into stocks. today is a nothing day and a steepening in the yield curve. i know you don't follow ford per se, but i have to figure that you would have some reaction to those ford numbers that were so much better than expected. what does it is a to you about the health of the american consumer and his and her willingness to part with their dollars? >> i think you take the auto numbers and you contrast that with what you say with the existing home sales. people are clearly willing to spend if they have a need or

they see a good deal and we see a lot of continuing caution with people still concerned about their overall income relative to where they need to spend and we think that continues going forward. ? bruce, jeff, happy new year. thanks for joining us. >> good to see you. up next, millions of americans pay tax preparer for their filings. >> i could don't it on my own. >> i used to do it on turbotax and now i have a person who does it for me. the irs has recently contacted me. >> oh, you poor baby. >> even though you got a person? >> even though i have a person. >> now the irs is going to regulate that business or at least register those tax preparers and make sure they could pass a test. is that good news or bad news for the industry and for their customers? we'll ask the ceo of h&r block. it's a "power lunch" exclusive. >> also this hour we're expecting breaking news from google.

the technology giant expected to unveil a new cell phone. we'll head live toing gooel headquarters for the latest and there's talk of reducing principle for troubled homeowners. is that fair considering that most americans actually pay their mortgages on time. >> all right. also, get ready for "the fast money halftime report" interesting dynamics and commodities. no handicap at all. we're back in two minutes on "power lunch." not long ago, this man had limited mobility.

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welcome back to "power lunch." i'm phil lebeau with breaking news. december sales from chrysler is better than expected. a decline of 10.5% when you adjust year over year for the month of december. the street was expecting a decline of 10%. so chrysler a little better than expected. a decline of 10.5%. tyler, we'll get gm numbers a little later on during "power lunch." back toç you. >> what's the expectation on gm? do you have one? on a decline of 1%. don't be surprised that they beat that because they have the dealer incentives to clear out saturn and pontiac and as we've seen with ford we could be seeing the beginning of the consumer starting to go back into the showrooms. >> boy, is gm advertising hard on all of the football games lately. they've been hitting with howie long is the pitchman there, right? >> you combine all of that together and i wouldn't be surprised if we see better than expected numbers from gm. >> chrysler absent from advertising as for as i can

tell. >> not entirely. they're doing more image spots and this is where they're at where they've got old product essentially for the next nine months to 12 months. they'll keep their name out there as much as possible, but you won't see a huge push from these guys until they have the fresh product out there. >> chrysler is doing 0% financing. >> i was just going to ask about that. they're offering 0% financing. is ford offering 0% financing or they outperforming without the incentivizing. >> they have the oldest products that are out there right now and that's just the way it works in the industry. ford is getting pricing power because it has fresh product out there relative to ford and relative to gm. >> it is not offering 0% financing. >> mushel t depending. across the board i don't believe so, but there may be isolated incidents around the country where you have dealers in certain markets that are offering 0%. >> or certain model, maybe. >> correct. >> we'll check back with you when gm comes down the pike as the saying goes. okay. more than three out of five

americans pay something to help prepare their taxes and for the first time the irs is now going to regulate those individuals. just minutes ago the irs commissioner dug shulman defended the move here on cnbc. >> it's going to mean that when they're sitting across from somebody disclosing sensitive financial information that that person -- they can be confident that that person at least has met some minimal qualifications and met some minimal standards. >> minimal standards. will those new standards, new regulations help the american taxpayer? joining us now with a cnbc exclusive is russ smyth, h&r block ceo. i hope i pronounced your name right. i gather you favor these new regulation which is seems a little curious. >> tyler, we think it's a great first step, and i think kudos to commissioner shulman and his team at irs, not only for the program that they outlined yesterday, but equally as

important for the process they went through. in terms of including input from aç lot of different constituencies prior to coming up with the recommendations. >> do you feel this way purely for charitable reasons or because this will make the smaller, less competitive sort of mom and pop preparers drive them out of the market and help your business? >> i think the answer is both. you know, h&r block, starting with henry block in the '07s has been on ridiculous as supporting regulation of the tax preparer industry. we're happy to compete with anyone else. all we want is a level playing field and we think these regulations will help ensure a more level playing field. >> it will raise costs, though? it's going to be more expensive to do this regulation and the expectation is that fees will go up. does that get then passed on to your customers and if so, what are the expectations on that? >> you know, the irs has not announced what the fees will be

for registration or for the competency examination. they've told us they will be reasonable, but they haven't given any of us dollar amounts. i take them at their word they'll be reasonable. i don't think we'll raise the cost for tax preparation and not just for clients at h&r block because we have tremendous amounts of testing every year that far exceed the guidelines that you heard from the irs. >> you know, russ, you talk to individual tax prep, people out there and they see this entire move by the irs. out of nowhere it's basically being entirely driven by h&r block as the entire idea and further they raise the issue of how is the irs going to register hundreds of thousands of people who are in this business and then try to enforce them to force them to get 15 hours' education. this is utterly unworkable, they argue. what do you say to that? >> i think it is workable and there are different models that are working out there in terms of whether it's regulated by the

government or other self-regulated organizations in other financial services segment. i think it is a workable solution. >> regulation achieves exactly what? >> think it helps american taxpayers make sure that they can have the confidence that when they're paying professional fees for tax preparation that they have the confidence that it will be done ethically. >> i didn't know which was some big problem at all and i think this is more to protect the irs. they want the prep guys to know we know where you live and if you cheat for your clients we're coming after you. isn't that the real thing at the heart of the matter? >> no. i think there are a couple of things at the heart of the matter. first of all, i think there are a lot of inaccurate and fraudulent tax returns being prepared. >> this does nothing to change that. >> factually. the previous guest, the irs commissioner says this is going to make sure that people are competent. you're saying that this will help eliminate fraud, it sounds like. those are two very, very different migs and you think a

guy who doesn't know who doesn't know how to fraud the irs isn't going pass the test? >> i think the issue is it's want just about testing and it's also about registration so the irs can keep track of when inaccuracies come up that they know where they're coming from. >> watch out because h&r block preparers could be in trouble next. thanks very much for being with us, sir. we appreciate it. up n the buzz is out there and it should be official in a little more than a half hour. we're talking the google phone. can the google boys compete with the apple iphone. >> let's take a look at shares down .25%. and the dow is down 26 points. the s&p is up 1.75 points. we're back in a moment.

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welcome back. it's a huge week for tech. the consumer electronics show gets under way in vegas soon and in about a half hour, google

expected to unveil its hotly anticipated cell phone. will be a game changer? jim goldman joins us live from the googlefest. >> if you want something done right maybe you have to do it yourself. at least that's the thinking at google headquarters as this company prepares to release its very own branded smartphone. as you said that's just about 35 minutes away and in the process google is taking its claim to what promises to be the next big thing in mobil and that, of course, is mobile advertising. the phone dubbed nexus one might turn into the key tool google uses to control new ad dollars as more search business moves from the desktop to the smartphone at over 500 bucks for an unlocked version of this phone, it might want be a unit seller for google, but it will drive excitement and interest in smartphones and mobile data access and advertising, too. that's good for google, the

entire android operating system platform and likely the broader smart phone sector. maybe not so good forç apple dealing now with yet another competitor. this one touting an open platform and shining a very bright light on a competing technology. it may not matter, at least as far as the short-term is concerned. the smartphone market is clearly big enough to support several big winners. the real question for investors, of course, is for how long? this, vent begins in 30 minutes and i'll be blogging and you can follow the action live on techcheck.c nbc.com. this will be a very interesting day indeed. >> stay with us. >> joining us now is the managing editor of "forbes." welcome back, bruce. >> is this to sell more advertisinging on search? >> they're desperately serious about this. they see the share that apple has in the mobile operating systems and whoever controls the os controls the advertising

often. apple has the lion share right now. the rumor is it will be an unlocked phone and you can take it to at&t and take it to t mobil and what iphone haters hate the most is the at&t network. >> bruce, what do you think about the reaction from carriers like verizon and sprint that have spent tens of millions of dollars on new add campaigns for the android, google-gubased competition expect. >> this is very early in the stage for google, and the softwaremaker inserting itselves as the handset company itself at this stage of the game. >> what about the reported price? if it's $500. when you go to some provider is you're subsidizing the phone because the monthly fees are higher. if you bring this phone to some company, are they going to charge me less per month? >> it depends on the calling plan. we don't know the details yet.

to europeans this is run of the mill. they're used to paying a high price for an unlockedtown phone and take to any retailer they want. i would rather have seen an ad support for google. >> are we going to see google advertise this phone? is it what we're going to see from that company? >> there's no doubt. i believe you will see this company advertise this phone, but let's want forget. we're talking about an unlocked phone. i don't necessarily think that motorola or htc or other manufacturers might be that upset. the real deal here is the google offers apple and the open system versus an unopen system that, phone offers and there'sç a lo of talk about that and when you look at apple and the iphone and the 3 billion apps that have been downloaded, over 100,000 apps available and that seems to be an open system and i'm not sure that google has the competitive leverage that it

might have had before apple came out with the app store. apple does have the platform and that seems to be open with so much development. >> quick question here. and often when software companies move into the hardware business they stumble. what's the danger for google if it gets off track? it is so much more about the software. so i don't think google has a problem there and they've shown that android is one of the fastest growingon rating systems and by 2012 it will be ahead of the iphone and behind only nokia. >> google's real competition is microsoft windows mobile and not really the iphone. >> gentlemen, thank you. >> nice job. thanks a lot, guys. >> it is tech week on cnbc. don't miss the special presentation "planet of the apps." scott wapner reports on the global phenomenon that's

creating billions in revenue and changing the way we live. planet of the apps is thursday. >> what station have you been watching? >> i haven't even seen it. i've got to wait. >> you didn't think of it. >> it's cable, we like bad puns. >> we love it! >> never miss a good word play. >> pending home sales plunge. another letdown in the housing market. plenty of talk also about principprinc principal reductions and slashing what someone owns on the mortgage. it will work? is it fair? that's our "power grid" debate. >> get red for the "fast money halftime report," melissa, what are you watching? >> tyler math son, we are all about giving you the real-time trade off breaking news this hour. ford, posing a 23% rise and we'll give you the ford trade. autozone chart is an interesting move off the ford news.

we'll talk about google and by the time we're on we'll be 15 minutes away from the nexus one and our traders will give you the trade moments before and all of that much more on "the halftime report and first more "power lunch" right after this. boss: hey, those gecko ringtones you put on our website are wonderful. people love 'em! gecko: yeah, thank you sir. turned out nice. boss: got another one for you. anncr: at geico.com, it's easy to get a free rate quote, manage your policy, make payments or even file a claim! boss: now that's a ringtone. gecko: uh yeah...it's interesting.... certainly not the worst ringtone i've ever heard...

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ales sliding in november after climbing for nine straight months. there are concerns growing about a housing recovery. there's talk of reducing the principle on mortgages was the best way to go. james lockhart is vice chairman of w.l. ross and company and he was on "squawk box" this morning. >> we need to start forgiving principle. 25% of the people are now underwater in their mortgages and if we want to keep them in their houses we'll have to do more than lower their payments. >> we're giving principle. will it work? is it fair? squaring off in the power grid debate. republican strategist trent duffy. you know how it works. you both have 20 seconds to make your case. trent, let me start with you. you think this is a good idea? >> this is why tim geithner and the obama administration's treasury secretary didn't go this route. they went the route of making home affordable with the program financed by taxpayers to bring down monthly payments and i don't know if it will work. in terms of fairness, geithner

himself raised the question of reducing principal. you're subsidizing people who may have made the wrong decision including lenders at the expense of people who made the right call. >> julia, why do you think reducing principal is a good idea? >> you never see the government intervene on private contract ps. >> the government does a bad situation from getting worse which is the situation here. 25% of all mortgages are under water in this country. 45% in states like florida, if we don't do something either crammed down or reducing principal you will see a very bad situation get much, much worse which is terrible for homeowners including people that aren't under water. >> trent, why wouldn't it be good to have these houses come to market at the lower prices? why not let them go into foreclosure? >> i think there's legit mass toe that, but individually the borrower and lender have got to make that call. there's 300 some thousand loans that have been modified and it was lower than it was in the

previous year before we had the support programs. in terms of cram down the administration talked a good game and they walked away from the table during the reform discussions this summer. >> what do you say to those people who do pay their mortgages and 75% of all americans who do pay their mortgages and many of whom chose to not get into mortgages that turned out to be problematic. >> i would say a principle reduction is in their interest because what if we don't get to manage the 20 million people that will be under water in their mortgages. they'll go into fore closure and that will send the price of housing including people that are paying their mortgage. >> when you reduce the princi l principal, you'll get to the same place. that's exactly the point and noç nearly as much if the house guess into foreclosure. >> how do you know that? >> if you get 20 million houses, it's basic economics. if you get 20 million mortgages getting into fore closure and they're sold at fire sale prices

and that brings the prices art funnelly low and to get a principal reduction to work, you hand you have to bring it down to market value because regardless of a person's ability to pay, if the home is still undervalued or under water compared to the market they're still incentivized to walk away. we bring it to market value and that's a much better situation to everybody, including people who pay it for the renter and the saver who get into the problematic mortgage to now have an ability to buy that house and be rewarded for having safe money? >> because what you do is you will have a sea of foreclosures which will reduce the price of real estate and not just for people that are in trouble, but for everybody else. >> everybody's values are going down. >> i've got news for you. >> it is going down in a very significant way and this is a nip in the bud to stop a bad situation from getting a lot worse. >> guy, good to see you. trent, julian, pleasure.

>> happy new year. >> what do you guys think? >> i yeah, it's unfortunate for people who are going through this particular situation and especially those who had an appropriate mortgage and were paying on it and lost their job for a long period of time, however, i think it's just prolonging the inevitable and the market needs to work itself out correctly. >> the latest numbers showed in two-thirds of the cases where the homeowners walked away, it's because the homeowner didn't put something down at all. oh, yeah, we'll whack your loan down by $100,000. >> housing is the ultimate leveraged investment. >> oh, absolutely. >> this is an example of how leverage can come back and bite you in the back side. >> and it's doing it in a big way. >> there is no guarantee when you buy a house. i can speak by math son's law many types that you will be able to sell that house for more than you bought it for. >> it is not a god-given right. >> up next we'll talk "avatar."

it's $1 billion winner now which means it will almost break each. and 3-d is all the rage. are you red for 3-d television. darren rovell will tell us why espn thinks it's a big score. >> plus one tock tech stock is hitting new 52-week highs and ten-year highs. we'll tell you what it is in a short while.

one of the buzz topics at the upcoming consumer

electronics show is 3-d and our sports business reporter darren rovell joins us with a sports twist on the new technology. >>ç that's right, sue. 3-d technology has been around for years and it's starting to push itself into the main veem and there's plenty of buzz due to the success of "after tar." 3-d television sets could be coming out in the near future and the key is always the content and that's coming to fruition fast as those who were behind six or each years ago don't want to be left behind again. here's what we know at this point. discovery, imax and sony are joining a joint venture for a 3-d channel. any espn will debut espn 3-d and they're promising 85 live events in its first year. the interesting twist in all this is for the content providers like the licensers and the sports leagues if they're going to be separate 3-d channels there will be a whole new set of rights fees as long as carriers, of course, want to

carry it and don't worry, those glasses figure to get better and better, and i've seen a sports event in 3-d, a lakers game. >> it was amazing? >> unbelievable. >> kobe bryant's driving along the baseline and you're, like -- >> i can see it for discovery and for all the -- >> the big question is will people show up at the games anymore? >> a shark week in 3-d. >> that works. >> i just don't want ever to be seen in 3-d, ladies and gentlemen. >> right here. >> do you want to see us in 3-d? >> no announcement for cnbc 3-d. i didn't hear that. >> oh, it's coming. >> shh! after a roaring ten years, are we at the start of a lost decade for bonds? our mavens will tell you what it means for your mono sneep plus it's the holy grail for big media. monetizing content. disney has a plan and we'll tell you what it is and whether it will pay off and it's a cnbc exclusive. up next, the "fast money

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welcome back to "the fast money halftime report wto ". we're getting to the heart of the action as it is happening. today we focus on the headlines. bullish out of ford and we're minutes from the release of

google's nexus phone. let's get to the word on the street giving you the real time trades. pete najarian and patty austin and scott rad ler of t-3 live. guys let's start off with ford. nice pop off the better than expected auto sales. pat, are you a buyer of ford here? >> you know, i think that you have got to respect what they've been doing. i have actually been playing the autoparts stores. i liked autozone going into this,ç but it's obvious from those numbers that people are buying new and not spending as much repairing yield and i think you have to be looking at them. >> take a look at the move in autozone. we saw a decline in the shares of autozone. i guess people aren't going to be buying the windshield wiper blades or whatever else you buy at autozones out there? >> are you a buyer on weakness of zones like that? >> i think you have to go with the momentum. we've seen it at ford and we started at $5 and it got up to

serve and got up to eight and it's punishing toward 11. the one cautionary thing i would throw out there is as you want to get in position with ford and you're talking about a company that's not that far away from being a profitable company. across the board they saw the sales -- >> sorry to interrupt. i have to break in with some news on goldman sachs. meredith whitney has cut estimates for the second time in about a month. she cut it by 50 cents in the fourth quarter to 5.50 to $6 a share. the last time she cut was back if december. we've heard trickles and trickles of news especially as we're getting the trading volumes coming in very light for the month of december. this is, of course, of no surprise, but the fact that meredith whitney who has some weight on wall street cut estimates once again and that is a concern. scott redler, what do you see in the stock for goldman? >> we entered goldman when it broke its downtrend last week which is 165.5. meredith's call might have a little bit of an impact for

profit-takers and she had an influential callback in the 190s. i don't think on this area you would have to worry about the fundamental thesis. i think the xlf and the financials took back their 50 day. i think they're strong and we saw volume and you can buy dips in goldman and the banks right now as we powered through the next few weeks. i would take what meredith said with a grain of salt and want be so focused on it. >> we do respect meredith whitney tremendously and the fine work she's done in the past, but we should note that many analysts throughout have been revising their estimates lower, specifically for goldman sachs as well as for a lot of the brokers on the back of this very, very light trading volume that we saw in the month of december. is it already in the stock. it sure seems like it is. although you have to look back as well and you saw the stock get down to 160 before we had the recent pop and then we had upgrades to morgan stanley as well. i think what you're starting to see is that people are digesting the fact that there were weaker trading days especially the whole month of december, fairly

weak and that's probably built in. so i think going forward if they still have the earnings power thqtç they think we do, even wih reduced numbers you're still talking about very, very cheap stocks with potential for great upside still. >> we should note goldman has been one of the stocks that had helped lead the market higher from the march lows and underperformed the market in the past month or so. j.j. can han, what are you seeing in terms of the options activity for goldman and the other brokers as we ramp up toward earnings season. >> what scott said in the xlf, you saw it break a big level and one of the interesting things we've seen so far today is over in citigroup. in citigroup we've seen in january 2011 calls, a very big buyer and both the five strike and the 7.5 struck. the 7.5 strikes traded 10% of its interest. so of all of the contracts outstanding traded 10% today and very aggressive buyers and i think that bodes well for the longer term. goldman may take a hit in the

short term, but i think in the longer term you have to be a buyer of these financial stocks because the tradinggoldman's th the best. they'll figure it out. >> news, once again to recap, we did see goldman knocked off highs of the session, news here is that analyst meredith whitney cut her estimates for the second time since december 17th on goldman sachs for the fourth quarter, as well as the out year. goldman sachs right now higher by 1%, but it had been higher on the session. let's move on to the nauz wiews will break in ten minutes' time, the google event schedule for the top of the hour to unveil the nexus 1 on the fast line with the trade ahead of the announcement, dr. j., pete najarian. we have had many analysts come on our show on "fast" saying this will not impact eps, and if it does, it will be a negative. is this positive, in your view,

in terms of the strategic direction of google? >> i don't believe its. based on channel checks that we've been going through, i don't think it's a game changer. i applaud google for the move that they're making here. but unfortunately, unlocked phone for over $500 is not what i think the public is crying for. i love the speed that the people at t-mobile tell me they're able to get on the network using this much faster chip, this snapdragon chip, but i don't think 530 plus for an unlocked phone or if people want to be on the t mobile network, talking mainly urban players, that's not a strong fol for google. that's why i don't think this is their iphone. i applaud them for theç move. >> the stock is ticking higher, as we approach the unveiling at the top of the hour. pete najarian, if you're a holder of google you wanted to take profits, would you say do

it now, pull the rip cord before 1:00 p.m. eastern time? >> i think if you're trading it based upon the nexus one, the answer would be yes. if you're trading google, this is a fundamental story with google. when you look at the cash, the cash on the streets and the flow and everything else, this is all about surge. this is less about the phone. let's be honest. this is not -- the $500 price tag, that is a imagine issue as well. >> $60 in cash per share. it's 10% of the share price. scott, what do you see in the charts for dole? yesterday, fbr raising its price target to $810 a share. >> i think google fundamentally the story's great. i think it's great that they're using the halo effect to get extra revenues in. fech caltechnically it's perforg well. it's between 620 and 629. technical traders looking to see if you can get above 629 and

hold above we'll see a momentum move toward the 650 area quickly. >> dr. j. on the fast line, thank you for your time and analysis. answer your burning questions. mylan labs and watson pharmaceuticals, are you buying the dip? >> absolutely. earnings power's incredible. >> fdo, family dollar, do you buy ahead of the release? >> you know, i think that the consumer's back to a certain extent, but they are not back all the way. still buying on value. you can get into something trading at 11 times. >> adp employment report out. j.j., hedging ahead of the report? >> absolutely you have to be heading ahead of that and unemployment. you'll see volatility index, vix under 19.5. back over 20 today. >> ces in las vegas begins tomorrow. what is your favorite tech name

going into this confab? >> apple is my favorite name in tech. vmw, it's in a great space with virtualization software, chart looks great. if it can trigger above 44, 45 on big volume it opens it up for a bigger move. >> going to take a pause on "the halftime report." pete najarian sometimes gets in and out of a trade in minutes. one stock he thinks is a good while google and apple roll off the tongues of tech investors there's one tech war horse riding strong at a ten-year high. "power lunch" reveals that. the google phone minutes away. apple planning another surprise and eye-popping 3-d coming to your tv. will tech innovation continue to drive the market higher? the best ways to play it. who says a makeover can't do wonders?

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welcome back to the "fast money" halftime report. to recap the news that broke here on "the halftime report," meredith whitney cutting fourth quarter estimates for goldman sachs for the second time since december 17th. cutting full year 10, 11, and 12 estimates. pete, the stock well off the highs of the session. is goldman a buy in january for 2010? >> i think that it is, but it shows you the power of meredith whitney, once again. it's right on the technical levels to watch. if you're looking to protect

yourself and want to hold it, buy some puts, they're very cheap. >> time to call the close. buy or sell? scott? >> market's strong, i remain a buyer into the close. >> j.j.? >> reluctant buyer into the close. >> patty? >> pick your places carefully but be long. >> and, peter? >> somewhat reluctant buyer into the close. later tonight, a sector that's red hot right now hitting the tape. >> sounds like a good one. good tease. what are you working on? >> watching the goldman story and following it closely. and also, big news involving a company whose stock is up more than 300% in the past 12 months. details on that one straight ahead. also still to come on "power lunch" -- ç a stealth tech super power, revenues near $100 billion and its stock hit a new ten-year high. it's not google, it's not apple, it's not amazon. we'll reveal the name and ask, is there still time to buy?

the battle for your living room heating up. trying to open up the key chest of digital down loading a thing of the past. inside the tiger's den. photos of the golfing great, plus the truth of his on course and offcourse life with a noted author. second hour of "power lunch" starts right now. and welcome. what are you talking about? >> nothing, absolutely nothing. >> what you joking about? welcome to the second hour of "power lunch." i'm tyler mathisen. breaking news in the financial sector. meredith whitney cutting her earnings forecast for goldman sachs for the fourth quarter and the year's 2010 through 2012, and there graphically, you see what's happened to goldman's stock. still higher on the day, but clearly moving lower, since that news came out. >> we'll talk to our market

insider about that moments from now. i'm sue herera. kraft is one of today's biggest percentage gainers in the dow, this after warren buffett warns the food giant overpaying for cadbury. kraft is up better than 3%. more on the kraft and buffett sto story straight ahead. google apple style dog and pony show getting under way. we expect tell take the wraps off the nexus one. i'm michelle caruso-cabrera. waiting for general motors any moment to report auto sales figures this hour. at same time, ford trading at fresh 52-week highs because they posted stronger than expected sales for december, much better than expected. phil lebeau is in chicago with the latest. >> when you look at these numbers and that chart, call it up again, i think people need to remember where ford shares were trading at within the last year. one point this stock was down and there you see today, up more than 7%. but if you go back 11, 12 months this stock was once trading at a

buck a share. that was the price that it was introduced at back in 19 i think '55 they went public. a stock down to a buck a share at one point. now up $11. that's a gain -- i can't do the multiplication percentagewise. huge gain for ford in the last 12 months.ç ford december sales better than expected. the street expecting an increase portfolio it was 15% better coming with a sales adjusted increase 23.3%. 14 of the last a15 months increased retail market share. ford, the brand will pass up chevy to become number two brand in the united states, the expectation heading into today. f-sear res remains the best-selling vehicle in the country the pickup truck. >> and that's not a huge surprise. they had a huge lead. it's way down from the heyday, one point expecting back in the '90s to sell a million in one

year. they didn't quite get there. this year they'll sell 490,000. >> that's the construction industry. >> that's the reflection of the economy. the housing market, truck sales move lock step with the housing market. if you're ford, all things are moving in the right direction here. >> phil, this number from ford, is this an auto industry number that we can say this is -- we can extrapolate out to the rest of the industry or is this a ford story and a good story just for ford? >> i think it's a little of both. clearly, it's a good story for ford. it continues what we've been reporting for the last several months. for auto industry, take the numbers and the fact that chrysler is better than ex-ed. listen, nothing to write home. we could see the start of auto sales starting to gradually increase from here. the expectation is that it's going to come in at 11 million sales rate for december. i wouldn't be surprised, given what we're hearing out of again motors early indication, it's

better than expected. we could see the sales pace come in at 11.11.4. >> a report that flashed one of the ford -- did you say analyst? >> analyst. ford sales analyst. >> 11.5 million, based on the sales. you're talking exactly the same thing. >> and this is an indication, some people say, listen, they have incentives at the end of the year. the fact of matter is we'll see sales increase from here. ultimately, it all moves in step with consumer confidence. that's where you look for auto sales. as it increases so does consumer confidence. >> phil, thanks very much. we'll be back in touch with you in a few minutes. let's get to the market reporters beginning with bob pisani. take us through the numbers. >> reporter: important thing, let's me just clarify a couple of things, for example, goldman sachs, it's true meredith whitney cut her numbers. she's above the street. so, for example, for the fourth quarter, she's cut her numbers to $5.50.

but the street estimate,ç the first call estimate, $5.42. she's above the street. the same with 2010. her numbers have been cut but they are above the street estimates. you see goldman sachs, moving to the downside. just note on ford here, phil did a great job on that, ford's had a 4 1/2 year high right now. there's a five-year chart of ford and that's magnificent stock in the last several months. we've got other positive news. airline number were positive here. continental and united good comments, passenger loads, how full the planes were in december, increasing. passenger revenues, down from last year but improving, better than expected. remember, not increasing capacity. none of these companies have announced capacity increases in 2010, so they're keeping a lid on expanding that capacity. the real disappointment november pending home sales numbers. contract signings of existing homes down 16%. that's a real disappointment. expecting to be down 2%.

clear right now that sales were distorted by the first-time home buyer tax credit. brian, nasdaq's in negative territory. >> not by much, bob. down 0.1%. there's so much focus on google and nexus one and apple. microsoft down half a percent. intel giving some, back down 1.2%. every day an analyst raises the price target of amazon they got a nice boost up 0.4%. ebay down 1.2. darren rovell talked about imax, discovery, sony getting together to get a 3-d television network. both stocks seeing upside. uaua up 7.5%. i brought up mesa, it's a penny stock, but a real dichotomy between the national big players and the regionals. mesa declared chapter 11 today,

down 56%. put it up to disparity. the locals are getting squeezed hard. let's talk more about goldman and its possible impact on the markets. joining that is possible pavlik, chief market strategist. >> how are you? >> fine. bob did a terrific job indicating that meredith whitney is above the street, so her cut, my question, how much impact will it have on the market? is it already in goldman stock? >> i think it's been priced in. what you've been seeing recently in the financial is a recent sort of sideways lovement from some of the highs. goldman started to move up recently. it wasn't because of any kind of expectations for increase in earnings. about but what you're going to see additional interest in the stock as the stock pulls back. people view it as a buying opportunity and start moving into the stock. this analyst estimate is just a

temporary thing. the stock will probably earn over $20 in 2010. i think it's a terrific buying opportunity to get into a wonderful company. >> a terrific buying opportunity. if the stock goes down, what you're saying goldman sachs if it earns less than some expected, it's still the best in breed? >> absolutely. take a look at competition. there's less competition. some of the other competition, the other companies out there doing the same type of thing, a little bit of disarray. still trying to get their hands wrapped around their business. morgan stanley trying to digest citigroup. bank of america working on merrill lynch. and so you have less competition. if you're going to take a company with an ipo to the market, who are you going to? the best company out there is goldman sachs. >> a lot of economic data today. the housing numbers that didn't look good. we got the other numbers that looked actually really great. then we get ford which looks good but chrysler not so good. how are you trading the economy here?

how are you trading, based on your expectations of the economy? >> i want to overweight, tech na technicals. >> you believe in the recovery. >> absolutely. you have a longer to go, so you have a lot more upside potential. you're guying to get news that's errat erratic. take a look at the manufacturing data, factory orders, durable good orders, regional manufacturing reports all indicating additional signs of growth. you take a look at employment situation. that's beginning to show signs of stabilization. the housing market's beginning to show signs of stabilization. the service sector. going to see some addition. strength with reports later this week. what i want to be doing overweighting cyclicals and underweighting the defensive areas like staples, utilities, health care. >> thanks, bob. appreciate it. one thing investors may be overlooking in the jobs report from the government due out on friday, if we see net increase

in jobs created for the first time in two years that will make people feel better. we're waiting for the individual investor to get back in a big way. >> that's where confidence hits the road. >> jobs. >> we saw with auto sales. >> if you don't think your neighbor's losing his job. >> my worry is some of that is already in the marketç and is that we're getting a rally before friday and one of the "fast money" guys made the suggestion, put in a little bit of protection. if we're talking about job creation, then it's already in the market. >> all right. we're going to move on to the storey about kraft's hostile bid for cadbury. will it ever end? let's bring in david faber. >> it's not that you don't -- you don't want to it end. >> no. >> january 19th, actually, is when we may know a lot more. that is when kraft is going to have to tell its shareholders and cadbury shareholders most

importantly what its real bid is. and in fact, kraft ceo left with a difficult decision because one of the largest shareholders, not the largest, not one of, the largest shareholder, warren buffett 9.4% came out with a unusual statement saying, as of now at least in his opinion, he will vote against the kraft bid for cadbury, remember they will be issuing so many shares kraft need a vote of its own shareholders. he can change his position. he doesn't know exactly what the bid is going to look look because we won't know until under uk takeover law day 46 of the process occurs january 19th, two weeks from today. fewer shares are used than he perhaps thinks will ultimately be the case. he thinks that they're undervalued and shouldn't be used as key currency in the deal. there's a takeover time line to follow this thing and figure out when it may end. >> what's the thing about day 46? >> day 46 when, as the bidder,

kraft, around uk takeover law, has to come with its best and final -- its final bid that will put to cadbury shareholders and they have a number of a couple of weeks to decide whether they want to take it. >> the uk has more laws about m&a than here we can let things go on and on. >> but the buffett thing -- >> god bless the queen. >> what does he want? what does he want? why is he doing this? what's the motivation? >> call over there and warren's not picking up the phone to talk to me. >> fascinating that he would choose this time, as you mention the the fact that he doesn't know what the bid's going to look like. what's he after? >> he doesn't want them to use a lot of stock it would seem. >> a $3 billion deal? sold off assets to bring into hersh hershey? >> nestle. against

warren buffett, your biggest holder and say we don't care. >> they're not the statement from kraft he's our largest investor. so of course we take his opinion seriously. we agree kraft food shares are deeply undervalued and we would certainly not do anything that would hurt shareholder value. >> timing is very interesting from mr. buffett's point of view. >> different point when it comes to nestle, do they get a double whammy? raise cash and get nesty out of the mix for cadbury? >> nestle's out entirely. they put a statement out because there were rumors around, though i remember reporting they were not in, they said we are out entirely, we will not bid in any way, shape, or form for cadbury. doesn't mean they might not pick off a unit should hershey mount a bid. >> up until now there was a possibility they would get? >> not and in what i had been hearing but in the market there were rumors.

under uk, when they ask for a statement, they have to give it. >> i like what joe currin said, he done get how kraft and cheese make a good -- peanut and chocolate would have been better. >> velveeta is a meal in itself. >> never tried it with chocolate? >> you like chocolate and cheese? >> i want to tell you about tomorrow night. david faber takes you inside the story of what has been called the worst deal ever made marriage from hell, breakup of aol time warner, 10:00 p.m. eastern time on cnbc. do not miss it. straight ahead, tech's stealth superstar $100 billion in revenue and its stock keeps hitting new ten-year highs. it's not apple. but we'll tell you what stock it is, whether there's time to get in. ford shares moving higher. goldman were higher. there's ford up 8% on those

really terribly strong numbers. and there's goldman, higher on the day, after meredith whitney lowered her earnings target. she's still, as bob pisani smartly points out, still above the street consensus, but you can see that the stock is off its daily high after that change in earnings estimate from meredith whitney.

google is holding a major event right now and you are looking at a webcast the company set to unveil its new nexus one smart phone. there's the logo for it. we'll have a liveç webcast. matt nesto monitoring the action. >> to be lucky better to be good. perfect timing that thing came up, we were listening to the company at the headquarters in mountainview, going on about the success and growth of their android phone. now we have this sneak peek at their new nexus one phone. we're going to be tracking and listen, of course, silicon bureau chief jim goldman on the ground in the room with the google brass, if you will unveiling this product that has been much awaited. the details will prove to be what makes or breaks this. there are some concerned that google predominantly and exclusively a software company, shouldn't be necessarily shipping cell phones.

there could be disappointment there, tyler. we have had a glimpse of the phone and we have, as i said, jim on the ground, who will keep us up to date twit, his details. >> let's listen in briefly to this webcast. i'm not sure we have an identification on who is speaking right now. but clearly -- >> it's interesting that it's not eric schmidt. if there were an apple conference, steve jobs would be up front. >> impressive hardware features of the nexus one. peter, please. >> thanks, mario. >> good morning. it's been great to be here again in google's team. two years ago we are here announcing the android, as mario

said, a year ago -- >> coverage of that google event where they've just unveiled the nexus one cell phone operating on the android platform. jim goldman is in the room. he is going to come out, once they release the press from that event. and he'll give us a full report about it. we'll follow it. let's move on, folks. talk about apple and google, they dominate the headlines. but we've in theed that there is another huge technology star surging under the radar, ibm. the stock closed out 2009 by hitting a ten-year high. big blue going to surge ahead again this year. joining us now is the senior research analyst for i.t. hardware at sanford bernstine. good to see you. >> thanks for having me. >> what do you think, ibm? why is it a continue-year hic can 2010 be another good year for ibm? >> ibm executed exceptionally well and 2010 can be another good year for ibm.

think back to the last decade in 2000, ibm earned $4.50 in earnings. they'll do $11 in earning this year. s&p did $56 in earnings in 2000. it's going to do $78. so ibm's tripled earnings over last decade. s&p up 50, 60%. >> they exited the consumer market. there is business spending out there but certainly not what it used to be. what's going to pow that continued earnings. >> what ibm has done an excellent job on has been delivering strong earnings, despite relatively modest revenue growth. revenue growth, we think, will only be 3%, that's what it's averaged over the last ten years. the company has, through a combination of cost cutting and moving more and more towards software, which has high margins, been able to expand its margins and deliver much higher earnings growth than revenue growth. we think they'll continue to do

that. >> at start of the 1990s we thought ibm and the mainframe were dead. now in washington, they're investigating ibm for anti-competitive practices in the booming mainframe market. government obstacle here, to your saying, outlook for ibm? >> the mainframe is a much less important part of ibm than it was historically. in the late '80s the mainframe accounted for 80% to 90% of ibm's profits. mainframe hardware today only 3% of revenues and total mainframe associated profits 30% of the companies. >> drives services, though, doesn't it? you install a big box, hire a bunch of people to do stuff to it for you. >> absolutely. it a key driver. you know, that's in our estimate of the 30% of profits driven from the mainframe. >> toni is ibm a growth or value stock? secondly, should it be a core technology holding in everyone's portfolio? >> it certainly is not a growth stock. when you have a company where we

think its longer term growth rate 3%, 4% top line, that's not a growth stock. what it is, is a very stable earnings deliverer. ultimately we think it can continue to do that. the model that we have for ibm is 10%, 12%, eps growth, 2% dividend and the stock strtradi at 20% discount to the market. if ibm trades at market multiple, it probably fair and investors are should pull back. at 20% discount,ç delivering yr in year out double digits earnings growth with good stability we think the stock remains attractive at current levels. >> good to see you. >> nice job. like hearing that about tech generally. critical focus for media companies monetizing content. disney has a plan. technology to go with it. will it be a model for the rest of the biz? julia boorstin an exclusive look at disney's dream.

>> disney shares 52-week highs over last month but lower by now 22 cents. up 35% this year.

let's talk about google for a second. the price of google shares down $2.23 on this big day for the company when they were moving into the telephone handset business with the phone they call the nexus one. google has been trading at or near 52-week highs recently. but today's news make selling the news there on the nexus one. >> looks like it there, tyler.

now let's talk disney. no, let's talk more google, actually. >> today, we're announcing the nexus one. nexus, the dictionary definition of nexus is a means of connection, and nexus one is where web meets phone. the nexus one is an exempt particular of what's possible on mobile phones throughout android. and the nexus one -- in an emerging category of devices which we call superphones and you're going to get a chance to play with the nexus today. hopefully not only today. hopefully you'll be able do a lot of productive things with it

after we depart today. >> well, let me tell you, steve jobs does an amazing job. they need to work on this webcast presentation a little bit, guys. >> the difference in showmanship is startling. where's the smoke machine and disco balls and mirrors? >> no, no, where's the camera shot and the focus? he's a little nervous. >> he was nervous, that's true. >> a lieutenant instead of a ceo. >> nexus one? >> isn't that a derivative, generic name, nexus one, new bank credit card. nexus one, new hybrid car. nexus one. i think droid was cuter. >> exactly. >> there's a shampoo named nexus. >> we have been calling it the droid. >> google's one of the best brand names in the world withouç any advertising attached to it. call it google phone with a little "f" infed of "pm."

i think they're going to ride it well. there's something about google that is saintly cool okay? and that is what helped the iphone. but now google's moving into a new space. >> it has to execute, right? it's up against a phone that executes. >> right. but like as they said in the previous segment it's about software and google is good at software. >> would people pay 500 bucks? >> if you get a cheaper monthly rate. that's how it works in europe, right? you pay a lot for the phone and nothing four your service. >> this better be really a lot better than -- than the iphone i can get. >> i bet you they sell a billion at 500 bucks ease easily. then you cut the price if half and upset michelle. >> like the kindle. >> what are you going to spell with an x. >> call it google phone and google with an "f" instead of

"ph" and leverage at heck out of it. nexus one, like you said, shampoo. >> seriously, that's what came to mind. >> more technology after this, disney. >> will it help the industry in might it commodityize content. julia boorstin will look at that. >> the market has held up remarkably well given the fact we had a cut by meredith whitney on goldman sachs earnings because in the past when goldman, so went the rest of the market. that's not the case. eseseseseses

the walt disney company ready to unleash new technology that could revolutionize distribution of the media business and put a price tag on it. cnbc's julia boorstin joins us with an exclusive look. julia in. >> reporter: disney wants you to access every movie or tv show you buy on any platform or gadget. it's a new key chest technology aims to make a virtual library a reality. technology available to all content distributors to verify what content you own, instantaneously updating your

library on each platform. the goal to get cable broadcasters, retailers, sony playstation to agree to make content you buy from each one availableç on the other's platforms. the more participants, the richer the system. for example, if iphones, comcast and disney participate you can pop a dvd into your compute somewhere upload the file to your desk top. itunes and comcast recognize you own the movie allow you watch it on your ipod or tv. >> if we can make devices interoperable and take away what frankly is the biggest issue with digital consumption in movies, all of a sudden we relieve the biggest pois point of pressure. once that happens, the market expands and everyone wins. >> reporter: disney won't charge for use of the technology but making digital content accessible could grow the no now-tiny business. key chest's accessibility will

make the digital purchase worth it. other companies rolling out 3-d technology because that is unpiratable. >> stick around. let's bring in disney analyst david joyce with miller tayeback in new york. to a consumer, i love this idea, i love paying it once and using anywhere i want. does it pound down the value of content? >> i think this does seem like it could be consumer friendly because with this digital era, there are more platforms to view the content. over the past year, especially both content and distribution companies have been working in earnest to try to figure out how to best protect the content, the value of the content, but make it accessible to the consumer on various products. >> julia, tell us what disney's up to here. when a new movie comes out i used to have buy it on dvd, i might download itunes copy for an extra charge, i might do it

on pay-per-view on cable. now i get it all for the price of one thing. >> reporter: and, dennis, i asked that same question yesterday. what disney said is that, look, the digital revenue business is so small right now it's tiny, it's 5% of the overall pie. they need to grow that digital revenue business. and they figure, if they can promise you that if you invest in that digital copy, you'll be able to access it everywhere, then more people will buy the digital copy. disney isn't going to make a profit from licensing the technology. it's all about making the digital download business a legitimate business model for the industry. >> is disney taking first mover status in opening this design up and offering it to others? is it going to clash with its own board member, steve jobs and anal? >> no, i wouldn't be surprised if steve has something to do with driving this to make it disney's well-known, and i think deserves some valuation premium for being a very good protector

of its brands and content. this is one way for them to really manage and try to stamp out the piracy of its content. but it sounds like distributors on various platforms could partake in the economics in some form. >> i bet you it will have to get get some adoption. >> investors are saying the last ten years were basically the lost decade for stocks. but a stellar few years for the bond market. however, with many yields near zero, are we looking a lost decade for the bond market? joining us, our own rick santelli. a pleasure to have you both here. rich, i guess the question is whether or not the return of your capital is compelling enough to keep people in a market where you are yielding almost zero in some cases or are we looking at a lost decade for the bond market? the. >> reporter: earn is ten years

and the immediate gratification trading society we find ourselves is a long time frame. i do think rates are going up, even if economic activity disappoints, i still think the size of issuance pushes rates up. but i think, for the next year or so, that the trajectory of rates is going to be a zigzag pattern. it isn't going to happen overnight. so that end i think it's more of a yield curve sway more moderate play. but two, three years down the road, the trading issuance, deficit, size of auctions is going to make rates much more aggressive a couple of years into the decade. >> rich berg, math is your forte and you worked up a lot of scenarios for us, if you will. simplify it for us. as you look out, as an investment vehicle for the next ten years, do you agree with what those who say stocks had their lost decade, now it's the bond market's turn? >> i'm confident to say over a five-year horizon i think the

fact that you'll have a loss five years is likely because all it would take is a round number, about 100-basis point rate rise on long-term rates. if you're buying long-term treasuries to get a zero return which is in that rate structure prevalent from 2001 and earlier when we started the credit bubble easing is the only time we've been below that rate structure, which put 30 year rates around 585. we are very concerned. if you bought bonds a year ago you have locked in almost a lost decade. i ran the numbers from lastç year's treasury rates, last year the ten-year note was 2.8. it is now -- sorry, 2.8. it is now almost 3.8, up over 100 basis points. it was 2.20. excuse me. we're a lot from last year. it's scary when you think how low interest rates are today and what your net return might be over the next five to ten years.

>> quickly, though it comes down to the safety factor for a lot of individual investors. if equities are not the place to put your money and real estate isn't the place right now, and a lot of people are souring on corporates, what about treasuries? >> well i think that as long as you're prepared to hold maturity if rates go up, returns get better in that regard. the face value will move down. i'm not sure real is state ultimately won't be a good investment at a time where we have a weaker dollar and potentially stabilization in what should be an inflation hedge in the form of real estate. >> gentlemen, thank you very much. next, we're talking about the stunning photo of tiger woods on the cover -- okay, i'm still talking about the photo of tiger woods on the cover of fanty fair. what's going on inside tiger's den? pictures never seen before. we'll tell you about tiger's

life on and off the course. plus -- who has more followers on twitter? the leader of the free world or the actor who punks people? the answers coming up. wednesday on squawk on the streak, morning star's ceo of the year. sectors poised for a take-off this year. watch erin burnett, mark haines, david faber and the opening bell, cnbc's "squawk on the street." live from the new york stock exchange weekdays 9:00 a.m. eastern. national car rental knows i'm picky. so, at national, i go right past the counter... and you get to choose any car in the aisle. choose any car? you cannot be serious! okay. seriously, you choose.

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electronic art says it is standing by tiger woods, the video game publisher which plans to release new online golf game feature too woods is sticking with the embattled golf star because he's, quote, one of the greatest athletes in history despite what ea calls mistakes off the course. electronics arts relationship with woods stretches back to 1997. here's a ten-year chart of the stock. over the last ten years, it down 16%. today's higher. >> mr. woods had no been seen by the general public since last november but he is on the cover of "vanity fair" magazine this month. there he is. we showed it to you yesterday. inside a terrific profile by buzz çbissinger and tiger wood like never seen before as seen through the lens of annie

leibovitz. we have a sneak peek on "power lunch." welcome. good to see you. >> thanks for having me on. >> i gather the thesis of your natural "vanity fair" is that, is that tiger woods was never, ever what he seemed to be. >> well, i mean that's right. and i think ever what he seemed to be. this is what it makes it go beyond a simple story of infidelity, millions feel betrayed. he projected this image of being perfect, of being affable, a great athlete, always saying sort of the right thing though he never said anything. but beneath it, obviously was a guy who was very -- who has a sexual addiction. >> did certain people know this? we're all familiar with athletes see simpson, o.j., who came out

in greater or lesser ways to be not who we thought they were. did we have hints in the case of tiger? >> i don't think we did. i don't think other golfers are did. golf writers certainly did not. did his inner circle know, diz mark steinburg know, if he's a good agent, he knew. now arguably, maybe we didn't want to know. we wanted to think that out there there was one person in the land of sports and celebrities who represented all of the ideals. >> we had tiger on "power lunch" a couple of times, bill griffeth and i interviewed him, because golf is not my forte i would ask him about how is kids were how his wife was, how married life was and he went on and on and on about how happy he was, how great life was. >> she's my best friend. >> she's my best friend, life could not get better. i beg to differ, he put out that image, at least on our network. >> no, i mean, that's what i'm saying. maybe i didn't articulate myself

well. i adegree with you completely. he projected a very calculated image, an image of being a good father, an image of being a good husband an image of being a good competitor, a good sportsman. beneath that image was someone very, very different. it was my problem. i agree with you completely. >> photos by annie leibovitz from two years ago, so they dug them out of the archives we're going to show them. what do you think they were trying -- he was trying to say.ç this is not -- i mean when i saw these i thought this is not the tiger that i knew. >> looks like an ultimate fighter in mixed marshall arts. >> he looks great! >> what makes the pictures compelling is what you're saying. this was not a tiger that we saw publicly. think was not a tiger whoever, ever revealed himself that way. we see -- >> why are we seeing them now? taken in 2007, right? >> taken in early 2006, they

were annie's, they never ran, i don't know why. i don't know what they were taken for. >> they're running now. >> but obviously when the scandal broke she went to "vanity fair" and said i have these pictures. >> i have a philosophical question, in terms of when is private life coverable by the immedia media. if that car accident wouldn't have happened would it be fair game to say tiger slept with a lot of women? >> i think it would have been fair game, once again, because of this image he projected of being sort of the perfect bionic man, as someone said. you know, going on and on about fatherhood, on and on about being a husband, on and on about his wife being his best friend. these things are hard to prove. >> that's the biggest crime, hypocrisy. >> people lead double lives all the time. >> that's true. >> clearly, he is certainly -- >> people live double lives all the time but don't profit on it by a billion dollars.

profit by a billion dollars because of the image he projected. >> absolutely correct. you commented about donald trump who had a statement saying that he thought tiger would come back and be bigger than ever and you said the fact that trump said that is proof that it will not happen. what did donald trump say to you that got you mad at him. >> i've seen donald trump operate for years. i read or heard he's having blagojevich on celebrity apprentice. donald trump likes to trump himself and trumpet his own horn. i don't -- to me, trump is no longer serious. he's a caricature. >> the best sports book i ever read "friday night lights," appreciate your work in that. the february issue of "vanity fair" hits newsstands in certain select cities tomorrow. let's go to phil with gm numbers. >> numbers for december weaker than expected. the street expecting a decline of 9%. gm reporting december sales,

adjust year-over-year, december sales down 12.8%. again weaker than the street expecting. the street expecting a decline of 9% and thisç includes gm goosing dealer incentives to clear out the saturn and upon point tea act inventory. that said, gm's numbers for december, weaker than expected. guys, that's the latest. ford sales chief coming up first on cnbc at 2:15. >> look forward to it very much. terror and travel, very high on the obama agenda. the president meeting with his national security team today. will all of this push his domestic agenda, those issues like energy and immigration, on the back burner? we'll have the beltway buzz for you. >> the markets selling off today, after yesterday's big run-up. hanging in there well. down 36 points at 10547 on the dow. s&p is actually nipped into positive territory.

given the political pressure on the white house surrounding national security and terror right now, will some items on president obama's domestic agenda like energy or immigration get pushed to the back burner? let's go to the beltway buzz from cnbc's chief washington correspondent john harwood. guys, good to see you. john, can we assume that since he's going to have to focus more, it seems now, on security, does that push the domestic agenda to the back burner? >> at least in the near term, it does. certainly this distraction posed by the terror plot in at temp to bring down the airliner was the last thing that the president wanted on his vacation or this first week back in washington. the only good news, he has a small amount of cushion because congress doesn't come back and engage until next week. so quul see some of that attention get siphoned out or returned back to health care next week. no question that this is not a topic the white house wants to

linger on very long. >> jimmy, if indeed some of the domestic agenda items get pushed away, is it perversely or not pretty good for the markets? >> well, i suppose you think the passage of the items that say cap and trade plan -- >> what if it doesn't? if energy goes to the way side, cap and trade doesn't happen? >> i think economically that would be good. it would remove the media uncertainty about the energy plan and lots of concernsç abo tax. it's an extremely full schedule. i don't think that was going to end up making it on the schedule anyways once you get done with jobs, health care, financial reform. there's not a lot of time left for cap and trade or more free trade agreements. >> i liked the president's response when this crisis broke. i like that he said this is unacceptable and went right after it. are we to a point where any mishap on security is the obama's mishap, it's something no longer that the

administration inherited? >> sure. he owns it all right now. you can look at the situation and say, well, you know, he inherited a security apparatus and made mistakes as tends to happen friend time to time in security regimes but it's his now and he's got to do something about it. that's why he's meeting with his members of the cabinet and speak to the country. he's got to be firm and forward leaning in terms of say, i'm demanding a different level of results. otherwise he'll pay a political price. >> let's talk the king of tweets. >> serious. >> king of tweets. president obama and then there's ashton kutcher. i think that obama is up to 3 million followers on twitter. i have around 1100. but ashton kutcher is up higher. not sure what the latest, is it up to 5 million yet? i talked to a former disney exec, when he negotiates for a film deal they pay extra.

someone's making money on twitter, it's not yet twitter. >> that will do it for "power lunch." thank you for joining us. >> "street signs" next with erin burnett. we will see you tomorrow. the markets trying to pare its losses. see if it can go positive. have a great afternoon.